Deal involved tools that could be used for weapons

By Jason Leopold

Scandal-plagued Halliburton -- the oil services company once
headed by Vice President Dick Cheney -- sold an Iranian oil
development company key components for a nuclear reactor, say
Halliburton sources with intimate knowledge into both companies'
business dealings.

Halliburton was secretly working at the time with one of Iran's
top nuclear program officials on natural gas-related projects and
sold the components in April to the official's oil development
company, the sources said.

In early August, a National Security Council report said Iran was
a decade away from acquiring a nuclear bomb. That time frame arguably
could have been significantly longer if Halliburton, the Pentagon
contractor whose military unit just reported a 284% increase in its
second-quarter profits due to its Iraq reconstruction contracts, were
not providing Iranians with the means to build a nuclear weapon.

With Iran's new hardline government now firmly in place, Iranian
officials have rounded up relatives and close business associates of
Iran's former president and defeated presidential candidate Hashemi
Rafsanjani, alleging the men were involved in widespread corruption
of Iran's oil industry, specifically tied to the country's business
dealings with Halliburton.

On July 27, one of Iran's many state controlled news agencies,
FARS, an "information" arm of the Islamic judiciary, announced the
arrest of several of the executives of the Oriental Oil Kish Co.,
which is owned by Rafsanjani's children and other relatives, on
charges of "economic corruption," according to a report posted on
IranPressNews.com

Now comes word that Halliburton, which has a long history of
flouting US law by conducting business with countries the Bush
administration said has ties to terrorism, was working with Cyrus
Nasseri, vice chairman of the board of Oriental Oil Kish, one of
Iran's largest private oil companies, on oil and natural gas
development projects in Tehran. Nasseri is also a key member of
Iran's nuclear development team and has been negotiating Iran's
nuclear development issues with the European Union and at the
International Atomic Energy Agency.

"Nasseri, a senior Iranian diplomat negotiating with Europe over
Iran's controversial nuclear program is at the heart of deals with US
energy companies to develop the country's oil industry," Financial
Times reported.

Oriental Oil Kish is registered in the United Kingdom and
Dubai.

Nasseri was interrogated by Iranian authorities in late July for
allegedly providing Halliburton with Iran's nuclear secrets and
accepting as much as $1 million in bribes from Halliburton, Iranian
officials said. During the first round of interrogations in the
judiciary, a huge network of oil mafia has been exposed, according to
IPN.

It's unclear whether Halliburton was privy to information
regarding Iran's nuclear activities. Halliburton sources said the
company sold centrifuges and detonators to be used for a nuclear
reactor and oil and natural gas drilling parts for well projects to
Oriental Oil Kish.

A company spokesperson did not return numerous calls for comment.
A White House spokesperson also did not return calls for comment.

In 1991, Halliburton sold Libya, another country that sponsors
terrorism, nuclear detonator devices. The company paid more than $3
million in fines for violating a US trade embargo that President
Reagan imposed in 1986 because of Libya's ties to terrorist
activities.

Oriental Oil Kish dealings with Halliburton became public
knowledge in January when the company announced that it had
subcontracted parts of the South Pars natural gas drilling project to
Halliburton Products and Services, a subsidiary of Dallas-based
Halliburton that is registered in the Cayman Islands.

Following the announcement, Halliburton said the South Pars gas
field project in Tehran would be its last project in Iran. The BBC
reported that Halliburton, which took in $30-$40 million from its
Iranian operations in 2003, "was winding down its work due to a poor
business environment."

Halliburton, under mounting pressure from lawmakers in Washington,
D.C., pulled out of its deal with Nasseri's company in May, but has
done extensive work on other areas of the Iranian gas project and was
still acting in an advisory capacity to Nasseri's company, two people
with knowledge of Halliburton's work in Iran said.

In an attempt to curtail other US companies from engaging in
business dealings with rogue nations, the Senate approved legislation
July 26 that would penalize companies that continue to skirt US law
by setting up offshore subsidiaries as a way to legally conduct
business in Libya, Iran and Syria, and avoid US sanctions under
International Emergency Economic Powers Act (IEEPA). The amendment,
sponsored by Sen. Susan Collins, R-Maine, is part of the Senate
Defense Authorization bill.

"It prevents US corporations from creating a shell company
somewhere else in order to do business with rogue, terror-sponsoring
nations such as Syria and Iran," Collins stated.

The law currently doesn't prohibit foreign subsidiaries from
conducting business with rogue nations provided that the subsidiaries
are truly independent of the parent company. But Halliburton's Cayman
Island subsidiary does not seem to fit that description.

Halliburton received a subpoena last year from a federal grand
jury in Texas in connection with a Justice Department investigation
into allegations that the firm violated US sanctions law prohibiting
American companies from directly doing business in Iran. That case is
ongoing.

Halliburton first started doing business in Iran as early as 1995,
while Cheney was chief executive of the company, in possible
violation of U.S. sanctions.

According to a February 2001 report in the Wall Street Journal,
"Halliburton Products & Services Ltd. works behind an unmarked
door on the ninth floor of a new north Tehran tower block. A brochure
declares that the company was registered in 1975 in the Cayman
Islands, is based in the Persian Gulf sheikdom of Dubai and is
non-American. But, like the sign over the receptionist's head, the
brochure bears the company's name and red emblem, and offers services
from Halliburton units around the world."

Moreover, mail sent to the company's offices in Tehran and the
Cayman Islands is forwarded to the company's Dallas headquarters.

Not surprisingly, in a letter drafted by trade groups representing
corporate executives vehemently objected to the amendment saying it
would lead to further hatred and perhaps incite terrorist attacks on
the US and "greatly strain relations with the United States' primary
trading partners."

"Extraterritorial measures irritate relations with the very
nations the United States must secure cooperation from to promote
multilateral strategies to fight terrorism and to address other areas
of mutual concern," said a letter signed by the Coalition for
Employment through Exports, Emergency Coalition for American Trade,
National Foreign Trade Council, USA Engage, US Council on
International Business and US Chamber of Commerce.

"Foreign governments view US efforts to dictate their foreign and
commercial policy as violations of sovereignty, often leading them to
adopt retaliatory measures more at odds with US goals."

Still, Collins' amendment has some holes. As Washington Times
columnist Frank Gaffney pointed out July 25, "the Collins amendment
would seek to penalize individuals or entities who evade IEEPA
sanctions -- if they are "subject to the jurisdiction of the United
States."

"This is merely a restatement of existing regulations," Gaffney
said.

Going a step further, Dow Jones Newswires reported that the US
Securities and Exchange Commission sent letters in June to energy
corporations demanding that the companies disclose in their security
filings any business dealings with terrorist supporting nations.

The move comes as investors have become increasingly concerned
that they may be unwillingly supporting terrorist activity. In the
case of Halliburton, the New York City Comptroller's office
threatened in March 2003 to pull its $23 million investment in the
company if Halliburton continued to conduct business with Iran.

The SEC letters are aimed at forcing corporations to disclose
their profits from business dealings rogue nations. Oil companies,
such as Devon Energy Corp., ConocoPhillips, Marathon Oil Corp. and
Occidental Petroleum Corp., that currently conduct business with
countries that sponsor terrorism, have not disclosed the profits
received from terrorist countries in their most recent quarterly
reports because the companies don't consider the earnings
"material."

Devon Energy recently sold its stake in an oil field in Syria.
ConocoPhillips has a service contract with the Syrian Petroleum Co.
that expires on Dec. 31.

Jason Leopold is former bureau chief of Dow Jones Newswires and
author of the explosive memoir, News Junkie, to be released in spring
2006 by Process/Feral House Books. See www.jasonleopold.com for
updates.